Minister of Public Enterprises gives Eskom green light to sign PPAs

SAWEA has responded to the Minister of Public Enterprises, Lynne Brown, giving Eskom the green light to sign the outstanding Power Purchase Agreements (PPAs) with renewable power producers.

The South African Wind Energy Association (SAWEA) is relieved that the 27 renewable energy projects, which include wind, solar PV and CSP should soon be able to proceed toward construction so that South Africa’s internationally acclaimed Renewable Energy Independent Power Procurement Programme (REIPPPP) can continue to deliver on-budget renewable power along with social and economic benefits in rural areas.

Over the past two years, the South African renewable energy industry has operated with extensive uncertainty. With this final step now achieved, it is hoped that the country’s renewable procurement programme will soon be back on track so that the many benefits to rural communities can be realised, much-needed jobs can be created, and so that investor confidence can be regained.

Minister Brown’s approval is the last step in the process and all that is now required is for all affected parties to set a mutually suitable date for signing the 27 power purchase agreements.

The last set of winning bids were announced in 2015. The task of getting the SA renewables programme back on track will be a challenge for all involved. SAWEA looks forward to working with government, civil society and labour to ensure that the programme makes an optimal contribution to South Africa’s economic, social and environmental security as the country prepares for the necessary energy transition.

Up until the time of the impasse, the REIPPPP was internally acclaimed and regarded as one of the most ambitious and successful public-private partnership that the country has ever undertaken. It has resulted in:

A 59% decline in the actual average tariffs for wind energy from the first bidding window in 2011 (2011 to 2015). Reasons for the decline in prices include a drop of component prices, technological advancements in wind harvesting, and strong competition by IPPs.

The 2016 tariff for wind energy is almost 40% cheaper than the one for baseload coal.

The price assumptions applied in the IRP 2016 are higher than actual REIPPPP tariffs.

The programme has resulted in over R20-billion being committed by IPPs over 20 years to socio-economic development, with a strong focus on education, health, skills develpment, predominantly within a 50 km radius of the power plants.